Monday, August 17, 2009

Breaking news from hyper-inflation nation comes via this AP report on the recent demise of the world's most laughable currency (laughable, that is, from a monetary policy standpoint, not from the perspective of the toll that it's taken on the people of Zimbabwe).

The Zimbabwe dollar is officially dead. It was killed off in hopes of curbing record world inflation of billions of percentage points, and Zimbabwe has replaced it with the U.S. dollar and the South African rand.

Yet the role of the old Zimdollar, as it is known, remains in flux. It is still used, and has become another point of contention for the divided leadership of the country, now one of the poorest in the world.

President Robert Mugabe has called for the return of the Zimdollar as legal tender, complaining that most Zimbabweans lack the hard currency needed to buy basic goods....But Finance Minister Tendai Biti, who joined the government as part of a power-sharing agreement between his Movement for Democratic Change and Mugabe's ZANU-PF party, has declared the local dollar indefinitely obsolete. He has threatened to quit if a return to the local currency is forced upon him.

"We are putting the tombstone on the corpse of the Zimbabwe dollar," Biti told lawmakers in a midyear fiscal policy statement. In a speech to business leaders, he said, "We are no longer printing our own money."

Bus drivers still use the Zimdollar to make change for bus fares paid for in hard currencies. One passenger reportedly demanded his change in hard currency ... at gunpoint.